REGULATION ON THE ADMINISTRATION OF FOUNDATIONS.doc

REGULATION ON THE ADMINISTRATION OF FOUNDATIONSChapter One General Provisions Article 1 These regulations have been formulated for the purpose of regulating organization and activities of foundations, maintaining legitimate rights and interests of foundations, donors and beneficiaries, as well as fostering the participation in public good by various social forces. Article 2 The term foundation mentioned herein refers to non-profit legal persons incorporated for the purpose of doing public good, with the use of properties donated by natural persons, legal persons or other organizations in compliance with these regulations. Article 3 Foundations shall be classified into foundations that raise funds from the public (hereinafter referred to as public foundations) and foundations that may not raise funds from the public (hereinafter referred to as non-public foundations). Based on the territories where the foundations may raise funds, public foundations shall be classified into national public foundations and local public foundations. Article 4 Foundations shall abide by the Constitution, laws, regulations and state policies and may neither jeopardize national safety, unification and ethnic unity nor violate public ethics. Article 5 Foundations shall observe the principles of openness and transparency when engaged in activities for the public good in accordance with their Articles of Associations. Article 6 The Ministry of Civil Affairs of the State Council and departments of civil affairs under provincial, autonomous regional and municipal peoples governments shall be the authorities in charge of registration of foundations hereinafter referred to as the registration authority(ies). The Ministry of Civil Affairs of the State Council shall be responsible for regulating registration of the following foundations and representative offices of foundations. 1. National public foundations;2. Foundations that propose to have persons other than residents of Mainland China become their legal representatives; 3. Non-public foundations with an initial capital exceeding 20 million Renminbi for the incorporation of which the promoter has applied to the Ministry of Civil Affairs of the State Council;4. Representative offices established by overseas foundations within the territory of Mainland China. Departments of civil affairs under provincial, autonomous regional and municipal peoples governments shall be responsible for regulating registration of local public foundations and non-public foundations other than those provided for in the previous paragraph within their respective administrative jurisdictions. Article 7 Relevant departments of the State Council or organizations authorized by the State Council are competent to act as the professional supervisory organizations of foundations and representative offices of overseas foundations that have registered with the Ministry of Civil Affairs of the State Council hereinafter referred to as supervisory organizations. Relevant departments of or organizations authorized by the provincial, autonomous regional and municipal governments shall be the professional supervisory organizations of foundations that have registered with departments of civil affairs under provincial, autonomous regional and municipal peoples governments. Chapter Two Incorporation, Alteration and Cancellation Article 8 For incorporation purpose, the following requirements shall be satisfied: 1. The foundation shall be incorporated for particular public good;2. Initial capital for incorporating a national public foundation, a local public foundation or a non-public foundation shall be no less than eight million Renminbi, four million Renminbi or two million Renminbi respectively. Such initial capital shall be paid-up currency funds available at their respective bank accounts of the above three types of foundations;3. The would-be foundation shall make ready a legitimate name, articles of association, structure of organizations as well as full-time employees in compliance with its activities;4. The would-be foundation shall have a fixed address;5. The would-be foundation shall be capable of independent assumption of civil liabilities. Article 9 To apply for incorporation of a foundation, the application shall submit the following documents to the registration authorities: 1. Application;2. Draft Articles of Association; 3. Capital Evaluation Report and Address Certification; 4. List of Board members, their identification certifications and resumes of proposedBoard Chairperson, Vice Board Chairpersons and Secretary General;5. Document(s) indicating approval from the professional supervisory organization of the intended incorporation Article 10 The Articles of Association of a foundation shall explicitly lay down the nature of public good the foundation is dedicated to but may not contain provisions that benefit particular natural persons, legal persons or other organizations. The Articles of Association of a foundation shall explicitly state the following items: 1. Name and address of the foundation; 2. Purposes of incorporation and scope of activities for the public good; 3. Amount of incorporation capital; 4. Composition, duties, power and rules of procedure of the Board; qualifications,procedure of election and term of office of Board members;5. Duties and responsibilities of legal representatives; 6. Duties, responsibilities, qualifications, procedure of election and term of office ofSupervisors; 7. Systems for preparation and audit of financial reports; 8. System for management and utilization of properties; 9. Terms and conditions and procedure for termination of the foundation and post-termination disposal of properties. Article 11 The registration authority shall decide whether to approve the registration application within 60 days as of its receipt of the full list of effective documents provided for in Article 9 of these regulations. Where the registration application is approved, the Certification of Registration of the Foundation Legal Person shall be granted; where the registration application is not approved, written justification thereof shall be provided. Items to be registered for incorporation of a foundation shall include name, address, classification, purposes, scope of activities for the public good, amount of incorporation capital and legal representative of the foundation. Article 12 Where a foundation plans to establish branch or representative office(s), it shall apply for registration of such establishment with the original registration authority and submit documents about the name(s), address(s) and head(s) of the proposed office(s). The registration authority shall decide whether to approve the registration application within 60 days as of its receipt of the full list of effective documents provided for in the previous paragraph. Where the registration application is approved, the Certification on Registration of Foundation Branch (Representative) Office shall be granted; where the registration application is not approved, written justification thereof shall be provided. Items to be registered for establishment of a branch or representative office of a foundation shall include name, address, classification, purposes, scope of activities for the public good, and head of the branch or office. A branch or representative office of a foundation shall carry out its activities as authorized by the foundation and as such shall not enjoy the status of a legal person. Article 13 Where an overseas foundation plans to establish a representative office in Mainland China, it shall submit the following documents to the relevant registration authority after obtaining approval from the professional supervisory organizations: 1. Application;2. Certification proving that the foundation was legally incorporated overseas; the articles of association of the foundation; 3. Identification certification and resume of proposed office head; 4. Address certification;5. Document(s) indicating approval from the professional supervisory organization concerning the establishment of such an office in Mainland China; The registration authority shall decide whether to approve the registration application within 60 days as of its receipt of the full list of effective documents provided for in the previous paragraph. Where the registration application is approved, the Certification on Registration of the Representative Office of An Overseas Foundation shall be granted; where the registration application is not approved, written justification thereof shall be provided. Items to be registered for establishment of a representative office of an overseas foundation shall include name, address, scope of activities for the public good, and head of the office. A representative office of an overseas foundation shall engage itself in activities for the public good that are in conformity with the nature of the Chinese cause of public welfare. The overseas foundation shall assume civil liabilities in accordance with PRC law for civil acts of its representative office in Mainland China. Article 14 After fulfilling registration formalities in accordance with these regulations, a foundation or a representative office of an overseas foundation shall complete registration formalities for tax purpose in accordance with law. A foundation or a representative office of an overseas foundation shall, by producing its Registration Certification, apply for its identification code as an organization, have its official seals carved and open bank accounts. A foundation or a representative office of an overseas foundation shall submit to the registration authority for filing purpose the following items, identification code as an organization, samples of official seals, bank account and a copy of its tax registration certification. Article 15 Where a foundation, a branch office of a foundation, a representative office of a foundation or a representative office of an overseas foundation needs to alter any items regarding registration, it shall apply to the registration authority for such alteration. Where a foundation needs to amend its Articles of Association, it shall apply to the professional supervisory organization for approval and report to the registration authority for verification purpose. Article 16 Where a foundation or a representative office of an overseas foundation is caught in one of the following situations, it shall apply to the registration authority for cancellation of its registration: 1. The foundation or representative office shall be terminated according to its Articles of Association; 2. The foundation or representative office is incapable of continuing to conduct activities for the public good in accordance with its Articles of Association; 3. The foundation or representative office needs to be terminated for other reasons. Article 17 Where a foundation needs to cancel its branch office or representative office, it shall apply to the registration authority for registration of such cancellation. Where a foundation is cancelled, its branch office or representative office shall be cancelled simultaneously. Article 18 Prior to going through the formalities for cancellation registration, the foundation shall establish a liquidation organization and complete liquidation as instructed by the registration authority or the professional supervisory organization. The foundation shall complete formalities for registration cancellation with the registration authority within 15 days as of the completion of liquidation and may not carry out any activities other than those of or in connection with liquidation during the period of liquidation. Article 19 Establishment, alteration and cancellation registration of a foundation, a branch office of a foundation, a representative office of a foundation or a representative office of an overseas foundation shall be disclosed to the general public by the registration authority. Chapter Three Organizational Structure Article 20 Any foundation shall establish a Board consisting of 5-25 members whose term of office shall be provided for by the Articles of Association of the foundation, provided that each term of office does not exceed a maximum of five years. At the expiry of his/her term of office, a Board member may be re-elected for another term.For non-public foundations established with private properties, the total number of foundation Board members that have close relatives with each other may not exceed 1/3 of the full Board. For other foundations, those who are close relatives with each other may not serve the Board concurrently. The number of Board members receiving remunerations from the foundation may not exceed 1/3 of the total number of Board members. The Board shall set positions for Chairperson, Vice Chairperson(s) and Secretary General, who shall be elected from the Board members, with the Chairperson being legal representative of the foundation. Article 21 The Board, being the decision-making body of the foundation, shall exercise its duties and power in conformity with the Articles of Association .Meetings of the Board shall be held at least twice a year; a meeting of the Board shall be convened only if more than 2/3 of Board members are present. Any Board resolution shall be adopted and become effective by the affirmative votes of more than half of the attending Board members. Resolutions on the following important matters shall be voted for by the attending Board members and shall become effective by affirmative votes of two-thirds of attending Board members. 1. Amendment to the Articles of Association; 2. Election or dismissal of the Chairperson, Vice Chairperson(s) or the SecretaryGeneral; 3. Substantial fund-raising or investment activities provided for in the Articles of Association; 4. Split of the foundation or consolidation with other foundation(s). A Board meeting should produce minutes to be reviewed and signed by the attending Board members. Article 22 A foundation shall set up the position of Supervisors. Term of office of a Supervisor is the same as that of a Board member. No Board member, or close relative of any Board member or accounting staff member of the foundation may concurrently hold position as Supervisor. A Supervisor reviews financial and accounting information of the foundation and monitors Board compliance in accordance with the Articles of Association. A Supervisor shall attend a Board meeting as an observer, shall be entitled to putting forward inquiries and recommendations to the Board and communicating relevant information to the registration authority, the professional supervisory organization, tax authority and accounting authority. Article 23 Current government officials may not concurrently become Chairperson, Vice Chairperson(s) or the Secretary General of a foundation. Legal representative of the foundation may not concurrently be legal representative of any other organization. The position of legal representative of a public foundation or a non- public foundation whose incorporation capital came from Mainland China shall be made available exclusively to Mainland residents. Anyone who has been sentenced to surveillance, detention, or imprisonment for criminal offences, where not more than five years has elapsed since the expiration of the period for enforcement of such sentences, or anyone who has been sentenced to the deprivation of his/her political rights, where he/she is serving the sentence or thereafter, or anyone who held the position of Chairperson, Vice Chairperson(s) or the Secretary General of a foundation whose registration was cancelled as a result of irregularities and was held personally responsible for such irregularities where not more than five years has elapsed since such cancellation, may not hold the positions as Chairperson, Vice Chairperson(s) or the Secretary General of another foundation. Where personal interests of any Board member of a foundation are related to interests of the foundation, such Board member may not participate in decision-making of related issues. None of the Board members or Supervisors or their close relatives may be engaged in any transactions with the foundation they are serving. Neither Supervisors nor Board members that do not work in the foundation on full-time basis may be remunerated by the foundation. Article 24 Residents of Hong Kong, Macao and Taiwan, foreigners and heads of representative offices of overseas foundations who hold positions of Chairperson, Vice Chairperson(s) or Secretary General must reside in Mainland China for no less than three months per annum. Chapter Four Management and Utilization of Properties Article 25 A foundation shall comply with purposes and scope of activities for the public good that are laid down in its Articles of Association when it organizes fund-raising activities and accepts donations. Representative offices of overseas foundations may not organize fund-raising activities or accept donations within the territory of P. R. China. While organizing fund-raising activities, public foundations shall publish its proposed activities for the public good and detailed fund utilization plan after completion of such activities. Article 26 Foundations and their donors and beneficiaries shall enjoy tax credits in accordance with relevant laws and administrative regulations. Article 27 Properties and other revenues of a foundation shall be protected by law and may not be distributed, seized, or misappropriated by any unit or individual without due authorization. A foundation shall utilize its properties in accordance with purposes and scope of activities for the public good that are laid down in its Art